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Advisers 'largely unprepared' for SMCR

 

Advisers are "largely unprepared" for the implementation of the Senior Managers and Certification Regime later this year, a compliance specialist in the industry has warned. 

The regime has already rolled out to banks and insurance companies and after December 9 it will apply to all 47,000 companies the FCA regulates.

Under the SMCR, anyone who holds a senior management function will need to be approved by the FCA and every senior manager will need to fill out a statement of responsibilities explaining what they are responsible for.

The FCA hopes the regime will help establish healthy cultures and effective governance in companies by encouraging greater individual accountability and establishing a new standard of personal conduct.

But with just months before the deadline Linda Gibson, director of regulatory change and compliance risk at BNY Mellon’s Pershing, has warned the advice industry remains largely unprepared. 

Ms Gibson said: "With this regime, unlike others, there is no one-size-fits-all approach because it really does depend on the size and fit of the firm and how it is structured as to how the implementation will be conducted. 

"We have the December deadline looming and the focus really should be on the senior managers, making sure you’ve identified them, that they are aware of the roles and responsibilities, and that they are trained.

"Now we have the luxury of an extra 12 months for the remaining certified staff - so that’s really the wider population in the firm - for them to be identified and trained. 

"But that really shouldn't lull advisers into a false sense of security, this really is a cultural wake-up call and it’s coming soon."

Earlier this month the FCA published the findings of its review into how well the rules under the SMCR had been embraced in the banking sector, finding some companies were not always sufficiently tailoring their conduct rule training to suit job roles within the business. 

The regulator said many firms were still often unable to explain what a conduct breach looked like in the context of their business and as a result announced it would be upping its supervision of how companies are embedding conduct rules and were meeting their responsibilities under the SMCR. 

Ms Gibson said advisers had an opportunity to learn from the banking sector’s response to the SMCR, specifically how well unprepared these firms were for the “sheer volume” of data required under the new rules. 

Ms Gibson said: "This is really important, because when things go wrong, and they will still go wrong in this regime, whether firms are conducting their own individual investigation or for when FCA comes knocking it’s really important they can comply with a clear audit trail of all that’s required of this regulation. 

"And that’s one of the points that the banks really underestimated."

rachel.mortimer@ft.com